Expenses repaid to volunteers working for your organisation are not taxed. Payments to volunteers for their services should be taxed as PAYE or as a schedular payment.
Sometimes you need to pay back the money volunteers spend doing their work for the organisation. This could be money they spend doing the work itself or travel to or from the work.
There's no tax to pay on the money you pay back to volunteers for expenses. These reimbursements are tax-exempt income if they're either:
- actual expenses
- a reasonable estimate of the likely cost.
You'll need a reasonable estimate of the likely cost when:
- you've reimbursed the volunteer for the expense before they’ve done the work
- you do not know the actual amount but you can make a reasonable estimate of the likely cost.
Taxing payments for services (honoraria)
Honoraria are payments to someone for doing work which is not normally part of their job, for example giving talks.
When you pay honoraria to:
- employees, use our PAYE calculator to work out the amount of tax
- someone who is not an employee, it's a schedular payment and is taxed at a flat rate.
Part reimbursement and part honoraria payments
You can make a payment for part honoraria and part reimbursement of expenses. Your record should show and be clear about the portions. Then only the honoraria is taxable and the reimbursement is tax-exempt income.
If it is not clear, the whole payment is honoraria and taxed as a schedular payment.
Payments to school trustees attending board meetings
The first part of any honoraria paid to school trustees for attending board meetings is counted as a reimbursement of expenses and is not taxed.
This is different for the chairperson and board members.
|Part of honoraria that is a reimbursement of expenditure
|Total allowed for the year
|$75 per board meeting
|$55 per board meeting
Any payment over and above these figures (either from honorarium or reimbursement of expenses) is taxable.
In other words, the maximum amount of exempt income (per meeting) is $75 for a chairperson or $55 for a board member.